Helmerich & Payne, Inc. · NYSE:HP
Helmerich & Payne — Barclays 2015 CEO Energy-Power Conference
48 slides from Helmerich & Payne's conference presentation, Sep 9, 2015
Slide 1: Barclays 2015 CEO Energy-Power Conference
Helmerich & Payne, Inc. Barclays 2015 CEO Energy-Power Conference September 9-10, 2015
Slide 2: Forward-looking Statements
Statements within this presentation are “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of hi
Slide 3: About Helmerich & Payne (H&P)
Very strong balance sheet U.S. land drilling market share leader Most modern and capable land drilling fleet Focused on superior innovation, safety and returns on capital Strong term-contracted backlog with high quality customer base About Helmerich & Payne (H&P)
Slide 4: H&P’s Global Rig Fleet
H&P’s Global Rig Fleet * Estimates include existing rigs and new build commitments as of September 9, 2015 and exclude nine conventional rigs decommissioned at the end of fiscal 2014 and 17 SCR powered FlexRigs decommissioned at the end of 2Q fiscal 2015.
Slide 5: Organic U.S. Land Fleet Growth
Organic U.S. Land Fleet Growth * Estimates include existing rigs and announced new build commitments. 354 49
Slide 6: Drilling Activity in the U.S.
Drilling Activity in the U.S.
Slide 7: U.S. Land Drilling Market Conditions
U.S. Land Drilling Market Conditions Faced with a global oversupply of oil as well as other macroeconomic headwinds, the short-term outlook for the industry is unfavorable. The energy services landscape is becoming more competitive with greater pressure to reduce well costs, enhance productivity, an
Slide 8: Fourth Fiscal Quarter H&P Operations Outlook
Fourth Fiscal Quarter H&P Operations Outlook Drilling Operations Outlook for 4Q of Fiscal 2015 Compared to 3Q of Fiscal 2015 U.S. Land Segment Revenue days now expected to decrease by slightly over 5% Average rig revenue per day still expected to decrease to roughly $26,000 (excluding the impact fro
Slide 9: New Build FlexRigs
New Build FlexRigs Approximately 40 new FlexRigs are scheduled to be completed during fiscal 2015 and approximately six during early fiscal 2016 All 46 of the above new FlexRigs are supported with multi-year term contracts that are expected to generate attractive economic returns for the Company 38
Slide 10: H&P Highlights
H&P Highlights Strong Multi-Year Backlog Most Advanced Fleet High Quality Customer Base Market Leader Superior ROIC and ROE Very Strong Balance Sheet Unprecedented Idle Capacity Best-in-Class Safety
Slide 11: H&P vs. Peers Credit Statistics
H&P vs. Peers Credit Statistics (As of June 30, 2015) Very Strong Balance Sheet 1. Total Capitalization is defined as Total Debt plus Shareholders' Equity. Total-Debt-to-Total-Capitalization Ratio1 Source: Company Filings
Slide 12: H&P’s U.S. Land Market Share
H&P’s U.S. Land Market Share As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land) As of August 2015 (~820 Active Rigs in U.S. Land) Note: The above estimates corresponding to market share are derived from Rig Data. PDS’ market share includes both PDS and Grey Wolf rigs. Additionally, the draw
Slide 13: U.S. Land Active Rig Count
U.S. Land Active Rig Count BHI Industry Rig Count Through Second Quarter of Calendar 2015 Market Leader
Slide 14: Ten Year Profit Comparison
* NBR’s operating income corresponds to its U.S. Lower 48, U.S. Offshore, and Alaska business units. Ten Year Profit Comparison ** PTEN’s operating income includes drilling operations in Canada. Market Leader
Slide 15: H&P’s Lead in U.S. Land AC Drive Rigs
H&P’s Lead in U.S. Land AC Drive Rigs * The above estimates corresponding to U.S. lower 48 AC Drive fleets are derived from Rig Data and corporate filings. **Estimated number of all other available AC Drive rigs not including those owned by HP, NBR, PTEN, and PDS. Most Advanced Fleet
Slide 16: Innovation & Applied Technology – FlexRig
Innovation & Applied Technology – FlexRig® AC Driven Systems & Integrated Top Drive Mechanized Tubular Handling Computerized Controls BOP Handling Driller’s Cabin Satellite Communications Rig Move Capabilities 31
Slide 17: Technology & Quality Service Make a Difference
Technology & Quality Service Make a Difference (1) Does not include the impact of early contract termination revenue. (2) Represents weighted-average rig margin per day for PTEN, NBR, PDS, and UNT. (3) Utilization is herein calculated to be average active rigs divided by estimated available marketab
Slide 18: Performance is Not Only About Better Rigs
Performance is Not Only About Better Rigs Our competitive advantage is also about: People Safety Experience Training Culture Support Structure Processes Organizational Network Maintenance Supply Chain
Slide 19: Delivering Safety – H&P vs. Industry
Delivering Safety – H&P vs. Industry (IADC) U.S. Land Safety Performance (2005 – August 2015) OSHA Recordable Injury Incidence Rates Injuries per 200,000 Man Hours * “H&P” data available through August 2015; “IADC w/o H&P” data available only through 1Q of 2015. H&P IADC w/o H&P Best-in-Class Safety
Slide 20: Safety Excellence Also Generates Savings
Safety Excellence Also Generates Savings Reduced Workers Comp and General Liability Losses per Man Hour EMR = Experience Modifier Ratio (Industry Average = 1.00) Best-in-Class Safety
Slide 21: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) * Excludes abandonment (non-cash) charges in 4QFY14 and 2QFY15. ** The corresponding ROIC values for the selected companies exclude certain extraordinary, non-recurring charges. Superior ROIC and ROE
Slide 22: H&P Global Fleet Under Term Contract
H&P Global Fleet Under Term Contract Strong Backlog The above term contract coverage excludes long-term contracts for which the Company received early contract termination notifications as of 9/3/15. During the first, second, and third fiscal quarters the Company generated approximately $23, $72, an
Slide 23: H&P vs. Industry U.S. Land Customer Base
H&P vs. Industry U.S. Land Customer Base Note: The above estimates corresponding to the active rig fleet in the U.S. are derived from multiple sources including Rig Data and corporate filings. High Quality Customer Base
Slide 24: H&P Customer Credit Ratings
H&P Customer Credit Ratings * As of June 30, 2015. Consists of 153 contracted U.S. Land rigs, 8 contracted Offshore rigs, and 19 contracted International Land rigs. Includes approximately 53 customers with active/contracted H&P rigs. ** The figures above represent H&P’s customer commitments for term
Slide 25: Unprecedented Idle Capacity
FlexRig Type Rig Power Type H&P U.S. Land Fleet (Idle Rigs as of 9/3/15) Pad-Optimal AC Drive FlexRigs Drawworks Horsepower Unprecedented Leverage to Cyclical Recovery Unprecedented Idle Capacity
Slide 26: Ongoing U.S. Land Market Trends
Ongoing U.S. Land Market Trends Unconventional plays continue to shape the landscape. Multiple wells being drilled from a single pad. AC drive rigs are best suited for more complex horizontal drilling. Customers continue to focus on drilling efficiency, technology and safety. The replacement cycle i
Slide 27: Increasing Focus on More Difficult Drilling
Increasing Focus on More Difficult Drilling
Slide 28: U.S. Land Horizontal and Directional Activity
Note: The above estimates corresponding to horizontal and directional rig activity by power type are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was greater than 600 horsepow
Slide 29: The Replacement Cycle: Customer Adoption
The Replacement Cycle: Customer Adoption Next 90 Operators (~400 Active Rigs by Power Type) Top 10 Operators (~210 Active Rigs by Power Type) Remaining Operators (~210 Active Rigs by Power Type) Top 10 Operators Next 90 Operators Remaining Operators They represent the 10 most active operators and em
Slide 30: The Replacement Cycle Continues
As of October 2014 (Peak) (~1,930 Active Rigs in U.S. Land By Power Type) The Replacement Cycle Continues As of October 2008 (Peak) (~1,925 Active Rigs in U.S. Land By Power Type) Note: The above estimates corresponding to rig activity are derived from multiple sources including Rig Data, Smith Bits
Slide 31: H&P’s Long Term Strategy
H&P’s Long Term Strategy Innovation Technology Safety and operational excellence Customer satisfaction Financial strength
Slide 32: Additional References
Additional References
Slide 33: H&P Activity as of September 3, 2015
H&P Activity as of September 3, 2015 Rigs Working/ Contracted 153 152 1 8 17 178 Rigs Available 346 338 8 9 40 395 8 403 % Contracted 44% 45% 13% 89% 43% 45% U.S. Land AC Drive FlexRigs SCR Fleet Offshore International Land Total FlexRig Construction Total Fleet 54% is pad-capable. 66% is pad-capabl
Slide 34: H&P’s U.S. Land Fleet Activity
H&P’s U.S. Land Fleet Activity (1) (1) Includes completed new builds pending delivery and not generating revenue days.
Slide 35: Leading U.S. Unconventional Driller
Leading U.S. Unconventional Driller * Includes 8 announced new FlexRigs with customer commitments scheduled for delivery in fiscal 2015 and first half fiscal 2016. (161 H&P Contracted Land Rigs as of 9/3/15*)
Slide 36: U.S. Activity by Well and Rig Type
U.S. Activity by Well and Rig Type Note: The above estimates corresponding to rig activity and rig type are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greate
Slide 37: U.S. Activity by Well and Rig Type
Note: The above estimates corresponding to rig activity and rig type are derived from multiple sources including Rig Data, Smith Bits, and corporate filings. Additionally, the drawworks capacity of each land rig included in the above analysis was equal to or greater than 600 horsepower. Certain assu
Slide 38: H&P’s International Land Operations
Active Idle Total Long-term Contracts Argentina 11 8 19 10 Bahrain 1 2 3 1 Colombia 2 6 8 1 Ecuador 1 5 6 Tunisia 2 2 U.A.E. 2 2 Total 17 23 40 12 H&P’s International Land Operations Rigs on term contract that have greater than or equal to 180 days remaining. 11 of 27 FlexRigs, included in the inter
Slide 39: Number of Rigs Already Under Long-Term Contracts
Number of Rigs Already Under Long-Term Contracts* (Estimated Quarterly Average, Including Announced New Builds - as of 9/3/15) H&P Global Fleet Under Term Contract Segment Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY15 FY16 FY16 FY16 FY16 FY17 FY17 U.S. Land 118.7 108.7 103.1 103.5 98.6 91.6 84.6 International Land 15.4
Slide 40: The FlexRig Difference: Key Advantages
The FlexRig Difference: Key Advantages Increased drilling productivity and reliability Variable frequency AC technology providing precise control and increased capability Computerized electronic driller more precisely controls down-hole parameters FlexRig designs are suited for both efficient well t
Slide 41: The Value Proposition: The Power of Efficiency
Theoretical 20% Efficiency 40% Efficiency Base Case Improvement Improvement 1. Drilling days average 13.5 10.8 8.1 Other days average 5.0 4.0 3.0 Moving days average (several multi-well pads) 1.5 1.2 0.9 Total rig days per well 20.0 16.0 12.0 Efficiency (Reduced Well Cycle Time) - 20% 40% 2. Drillin
Slide 42: Ten-Year Relative Shareholder Return
Ten-Year Relative Shareholder Return Source: Thomson Reuters as of September 4, 2015.
Slide 43: Land Drilling Market Valuations
Land Drilling Market Valuations Source: Thomson Reuters as of September 4, 2015.
Slide 44: Return on Equity
Return on Equity Superior ROIC and ROE * Excludes abandonment (non-cash) charges in 4QFY14 and 2QFY15. ** The corresponding ROE values for the selected companies exclude certain extraordinary, non-recurring charges.
Slide 45: Current Dividend Yields
Current Dividend Yields Source: Thomson Reuters. Yields calculated as of market close on September 4, 2015.
Slide 46: Oil and Natural Gas Prices
Oil and Natural Gas Prices Source: Energy Information Administration and Thomson Reuters. Oil Prices Natural Gas Prices
Slide 47: Oil vs. Natural Gas Directed Rig Count
Oil vs. Natural Gas Directed Rig Count
Slide 48: End of Document
End of Document
Helmerich & Payne — Barclays 2015 CEO Energy-Power Conference on 6ix